- Second Quarter Net Income of $170.7
Million or $0.16 Per Diluted Share, Compared to the Prior Year
Second Quarter Net Income of $14.8 Million or $0.01 Per Diluted
Share
- Second Quarter Adjusted Net Loss Per
Diluted Share of $0.01, Compared to the Prior Year Second Quarter
Adjusted Net Income Per Diluted Share of $0.03
- Adjusted EBITDA of $213.3 Million
for the Second Quarter, Compared to the Prior Year Second Quarter
Adjusted EBITDA of $312.7 Million
Rite Aid Corporation (NYSE: RAD) today reported operating
results for its second fiscal quarter ended September 2, 2017.
For the second quarter, the company reported revenues of $7.7
billion, net income of $170.7 million, or $0.16 per diluted share,
Adjusted net loss of $15.6 million, or $0.01 per diluted share and
Adjusted EBITDA of $213.3 million, or 2.8 percent of revenues.
“While our performance for the quarter reflects a challenging
reimbursement rate environment and the effects of an extended
merger and asset sale process, securing regulatory clearance for
the amended asset sale agreement with Walgreens Boots Alliance
gives us a clear path forward to realize the benefits of the
transaction and implement our plans to deliver improved results. In
addition, we’ve announced this morning that Kermit Crawford – a
proven leader with extensive retail pharmacy experience – is
joining Rite Aid as president and chief operating officer to
further strengthen our leadership team,” said Rite Aid Chairman and
CEO John Standley.
“As we work to complete the asset sale, which will reduce our
leverage and provide greater financial flexibility to invest in our
business, we’ll also focus on generating momentum for our business
by meeting the health and wellness needs of our customers and
patients while delivering an outstanding experience in our
stores.”
Second Quarter Summary
Revenues for the quarter were $7.7 billion compared to revenues
of $8.0 billion in the prior year’s second quarter, a decrease of
$350.9 million or 4.4 percent. Retail Pharmacy Segment revenues
were $6.3 billion and decreased 3.4 percent compared to the prior
year period primarily as a result of a decrease in same store sales
and reimbursement rates. Revenues in the company’s Pharmacy
Services Segment were $1.5 billion and decreased 8.7 percent
compared to the prior year period, due to an election to
participate in fewer Medicare Part D regions.
Same store sales for the quarter decreased 3.4 percent over the
prior year, consisting of a 4.6 percent decrease in pharmacy sales
and a 0.9 percent decrease in front-end sales. Pharmacy sales
included an approximate 189 basis point negative impact from new
generic introductions. The number of prescriptions filled in same
stores, adjusted to 30-day equivalents, decreased 1.8 percent over
the prior year period due in part, to exclusion from certain
pharmacy networks that Rite Aid participated in the prior year.
Prescription sales accounted for 67.8 percent of total drugstore
sales, and third party prescription revenue was 98.3 percent of
pharmacy sales.
Net income was $170.7 million or $0.16 per diluted share
compared to last year’s second quarter net income of $14.8 million
or $0.01 per diluted share. The improvement in operating results
was due primarily to receipt of the $325.0 million merger
termination fee from Walgreens Boots Alliance, Inc. (Nasdaq: WBA)
for the termination of the merger agreement, effective June 28,
2017, partially offset by a decline in Adjusted EBITDA and higher
income tax expense.
Adjusted net loss was $15.6 million or $0.01 per diluted share
compared to last year’s second quarter adjusted net income of $36.4
million or $0.03 per diluted share. The decline in Adjusted net
income was due to a decline in Adjusted EBITDA, partially offset by
a reduction in adjusted income tax expense and depreciation and
amortization expense.
Adjusted EBITDA (which is reconciled to net income in the
attached tables) was $213.3 million or 2.8 percent of revenues for
the second quarter compared to $312.7 million or 3.9 percent of
revenues for the same period last year. The decline in Adjusted
EBITDA was due to a decrease of $98.6 million in the Retail
Pharmacy Segment. The decrease in the Retail Pharmacy Segment
EBITDA was primarily driven by a decline in pharmacy gross profit,
which was due to a decline in reimbursement rates, which the
company was unable to fully offset with generic purchasing
efficiencies and lower script counts. The decline in pharmacy gross
profit was partially offset by good cost control. Adjusted EBITDA
in the Pharmacy Services Segment was flat compared to the prior
year.
In the second quarter, the company opened 1 store, relocated 1
store, remodeled 54 stores and expanded 1 store, bringing the total
number of wellness stores chainwide to 2,532. The company closed 17
stores, resulting in a total store count of 4,507 at the end of the
second quarter.
Rite Aid is one of the nation’s leading drugstore chains with
4,507 stores in 31 states and the District of Columbia. Information
about Rite Aid, including corporate background and press releases,
is available through Rite Aid’s website at www.riteaid.com.
Conference Call Broadcast
Rite Aid will hold an analyst call at 8:30 a.m. Eastern Time
today with remarks by Rite Aid's management team. The call will be
simulcast via the internet and can be accessed at www.riteaid.com
in the conference call section of investor information. Slides
related to materials discussed on the call will also be available.
A playback of the call will be available on both sites starting at
12 p.m. Eastern Time today. A playback of the call will also be
available by telephone beginning at 12 p.m. Eastern Time today
until 11:59 p.m. Eastern Time on Sept. 30, 2017. The playback
number is 1-855-859-2056 from within the U.S. and Canada or
1-404-537-3406 from outside the U.S. and Canada with the
eight-digit reservation number 72531385.
Cautionary Statement Regarding Forward Looking
Statements
Statements in this release that are not historical, are
forward-looking statements made pursuant to the safe harbor
provisions of the Private Securities Litigation Reform Act of 1995.
Such statements include, but are not limited to, statements
regarding the expected timing of the closing of the sale of stores
and assets to WBA; the ability of the parties to complete the sale
and related transactions considering the various closing
conditions; the outcome of legal and regulatory matters in
connection with the sale of store and assets of Rite Aid to WBA;
the expected benefits of the transactions such as improved
operations, growth potential, market profile and financial
strength; the competitive ability and position of Rite Aid
following completion of the proposed transactions; the ability of
Rite Aid to implement new business strategies following the
completion of the proposed transactions and any assumptions
underlying any of the foregoing. Words such as “anticipate,”
“believe,” “continue,” “could,” “estimate,” “expect,” “intend,”
“may,” “plan,” “predict,” “project,” “should,” and “will” and
variations of such words and similar expressions are intended to
identify such forward-looking statements. These forward-looking
statements are not guarantees of future performance and involve
risks, assumptions and uncertainties, including, but not limited
to, our high level of indebtedness and our ability to make interest
and principal payments on our debt and satisfy the other covenants
contained in our debt agreements; general economic, industry,
market, competitive, regulatory and political conditions; our
ability to improve the operating performance of our stores in
accordance with our long term strategy; the impact of private and
public third-party payers continued reduction in prescription drug
reimbursements and efforts to encourage mail order; our ability to
manage expenses and our investments in working capital; outcomes of
legal and regulatory matters; changes in legislation or
regulations, including healthcare reform; our ability to achieve
the benefits of our efforts to reduce the costs of our generic and
other drugs; risks related to the proposed transactions, including
the possibility that the transactions may not close, including
because a governmental entity may prohibit, delay or refuse to
grant approval for the consummation of the transactions, or may
require conditions, limitations or restrictions in connection with
such approvals, the risk that there may be a material adverse
change of Rite Aid, or the business of Rite Aid may suffer as a
result of uncertainty surrounding the proposed transactions; risks
related to the ability to realize the anticipated benefits of the
proposed transactions; risks associated with the financing of the
proposed transaction; disruption from the proposed transaction
making it more difficult to maintain business and operational
relationships; the effect of the pending sale on Rite Aid's
business relationships (including, without limitation, customers
and suppliers operating results and business generally; risks
related to diverting management's or employees' attention from
ongoing business operations; the risk that Rite Aid's stock price
may decline significantly if the proposed transaction is not
completed; significant transaction costs; unknown liabilities; the
risk of litigation and/or regulatory actions related to the
proposed transactions; potential changes to our strategy in the
event the proposed transactions do not close, which may include
delaying or reducing capital or other expenditures, selling assets
or other operations, attempting to restructure or refinance our
debt, or seeking additional capital, and other business effects.
These and other risks, assumptions and uncertainties are more fully
described in Item 1A (Risk Factors) of our most recent Annual
Report on Form 10-K, and in other documents that we file or furnish
with the Securities and Exchange Commission, which you are
encouraged to read. Should one or more of these risks or
uncertainties materialize, or should underlying assumptions prove
incorrect, actual results may vary materially from those indicated
or anticipated by such forward-looking statements. Accordingly, you
are cautioned not to place undue reliance on these forward- looking
statements, which speak only as of the date they are made. Rite Aid
expressly disclaims any current intention to update publicly any
forward-looking statement after the distribution of this release,
whether as a result of new information, future events, changes in
assumptions or otherwise.
Reconciliation of Non-GAAP Financial Measures
The company separately reports financial results on the basis of
Adjusted Net Income (Loss), Adjusted Net Income (Loss) per Diluted
Share, and Adjusted EBITDA, which are non-GAAP financial measures.
See the attached tables for a reconciliation of Adjusted Net Income
(Loss), Adjusted Net Income (Loss) per Diluted Share and Adjusted
EBITDA to net income (loss), and net income (loss) per diluted
share, which are the most directly comparable GAAP financial
measures. Adjusted Net Income (Loss) and Adjusted Net Income (Loss)
per Diluted Share exclude amortization of EnvisionRx intangible
assets, merger and acquisition-related costs, loss on debt
retirements, LIFO adjustments, and the Walgreens Boots Alliance,
Inc. termination fee. Adjusted EBITDA is defined as net income
(loss) excluding the impact of income taxes, interest expense,
depreciation and amortization, LIFO adjustments, charges or credits
for facility closing and impairment, inventory write-downs related
to store closings, debt retirements, the Walgreens Boots Alliance,
Inc. termination fee, and other items (including stock-based
compensation expense, merger and acquisition-related costs,
severance and costs related to distribution center closures, gain
or loss on sale of assets and revenue deferrals related to our
customer loyalty program).
RITE AID CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (Dollars in thousands) (unaudited)
September 2, 2017 March 4, 2017 ASSETS Current
assets: Cash and cash equivalents $ 238,978 $ 245,410 Accounts
receivable, net 1,843,320 1,771,126 Inventories, net of LIFO
reserve of $1,022,282 and $999,776 2,877,427 2,837,211 Prepaid
expenses and other current assets 221,644
211,541 Total current assets 5,181,369 5,065,288 Property,
plant and equipment, net 2,188,217 2,251,692 Goodwill 1,715,479
1,715,479 Other intangibles, net 747,288 835,795 Deferred tax
assets 1,453,291 1,505,564 Other assets 212,664
219,934 Total assets $ 11,498,308 $ 11,593,752
LIABILITIES AND STOCKHOLDERS' EQUITY Current
liabilities: Current maturities of long-term debt and lease
financing obligations $ 22,491 $ 21,335 Accounts payable 1,687,880
1,613,909 Accrued salaries, wages and other current liabilities
1,270,840 1,370,004 Total current
liabilities 2,981,211 3,005,248 Long-term debt, less current
maturities 7,082,549 7,263,288 Lease financing obligations, less
current maturities 37,890 44,070 Other noncurrent liabilities
663,048 667,076 Total liabilities
10,764,698 10,979,682 Commitments and contingencies - -
Stockholders' equity: Common stock 1,062,411 1,053,690 Additional
paid-in capital 4,841,700 4,839,854 Accumulated deficit (5,129,213
) (5,237,157 ) Accumulated other comprehensive loss (41,288
) (42,317 ) Total stockholders' equity 733,610
614,070 Total liabilities and stockholders' equity $
11,498,308 $ 11,593,752 RITE AID
CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS
OF OPERATIONS (Dollars in thousands, except per share amounts)
(unaudited)
Thirteen weeks endedSeptember 2, 2017
Thirteen weeks endedAugust 27, 2016
Revenues $ 7,678,903 $ 8,029,806 Costs and expenses: Cost of
revenues 5,891,900 6,113,063 Selling, general and administrative
expenses 1,734,306 1,778,247 Lease termination and impairment
charges 3,128 7,233 Interest expense 111,261 105,388 Walgreens
Boots Alliance merger termination fee (325,000 ) - (Gain) loss on
sale of assets, net (14,495 ) 174
7,401,100 8,004,105 Income
before income taxes 277,803 25,701 Income tax expense
107,087 10,928 Net income $ 170,716 $
14,773 Basic and diluted earnings per share:
Numerator for earnings per share: Income attributable to common
stockholders - basic and diluted $ 170,716 $ 14,773
Denominator: Basic weighted average shares
1,048,548 1,044,198 Outstanding options and restricted shares, net
18,668 17,251 Diluted weighted
average shares 1,067,216 1,061,449
Basic and diluted income per share $ 0.16 $ 0.01
RITE AID CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS (Dollars in thousands, except
per share amounts) (unaudited)
Twenty-six weeks endedSeptember 2,
2017
Twenty-six weeks endedAugust 27, 2016
Revenues $ 15,460,356 $ 16,213,987 Costs and expenses: Cost of
revenues 11,914,319 12,402,944 Selling, general and administrative
expenses 3,495,596 3,571,494 Lease termination and impairment
charges 7,214 13,014 Interest expense 221,198 210,501 Walgreens
Boots Alliance merger termination fee (325,000 ) - (Gain) loss on
sale of assets, net (20,216 ) 1,230
15,293,111 16,199,183 Income
before income taxes 167,245 14,804 Income tax expense 71,878
4,619 Net income $ 95,367 $ 10,185
Basic and diluted earnings per share:
Numerator for earnings per share: Income attributable to common
stockholders - basic and diluted $ 95,367 $ 10,185
Denominator: Basic weighted average shares
1,047,687 1,043,317 Outstanding options and restricted shares, net
22,597 17,210 Diluted weighted
average shares 1,070,284 1,060,527
Basic and diluted income per share $ 0.09 $ 0.01
RITE AID CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (In thousands)
(unaudited) Thirteen weeks ended Thirteen
weeks ended September 2, 2017 August 27, 2016 Net income $ 170,716
$ 14,773 Other comprehensive income: Defined benefit pension plans:
Amortization of prior service cost, net transition obligation and
net actuarial losses included in net periodic pension cost, net of
$342 and $451 tax expense 515 681 Total other
comprehensive income 515 681 Comprehensive income $
171,231 $ 15,454 RITE AID CORPORATION AND
SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE
INCOME (In thousands) (unaudited) Twenty-six
weeks ended Twenty-six weeks ended September 2, 2017 August 27,
2016 Net income $ 95,367 $ 10,185 Other comprehensive income:
Defined benefit pension plans: Amortization of prior service cost,
net transition obligation and net actuarial losses included in net
periodic pension cost, net of $684 and $902 tax expense
1,029 1,362 Total other comprehensive income 1,029
1,362 Comprehensive income $ 96,396 $ 11,547
RITE AID CORPORATION AND SUBSIDIARIES SUPPLEMENTAL
SEGMENT OPERATING INFORMATION (Dollars in thousands) (unaudited)
Thirteen weeks endedSeptember 2, 2017
Thirteen weeks endedAugust 27, 2016
Retail Pharmacy Segment Revenues (a) $ 6,267,929 $
6,485,482 Cost of revenues (a) 4,584,188
4,666,133 Gross profit 1,683,741 1,819,349 LIFO charge
5,632 13,760 FIFO gross profit
1,689,373 1,833,109 Gross profit as a percentage of revenues
26.86 % 28.05 % LIFO charge as a percentage of revenues 0.09 % 0.21
% FIFO gross profit as a percentage of revenues 26.95 % 28.26 %
Selling, general and administrative expenses 1,658,873
1,708,633 Selling, general and administrative expenses as a
percentage of revenues 26.47 % 26.35 % Cash interest expense
105,207 100,105 Non-cash interest expense 5,434
5,273 Total interest expense 110,641 105,378
Adjusted EBITDA 163,995 262,643 Adjusted EBITDA as a percentage of
revenues 2.62 % 4.05 %
Pharmacy Services
Segment Revenues (a) $ 1,492,831 $ 1,634,876 Cost of revenues
(a) 1,389,569 1,537,482 Gross profit
103,262 97,394 Gross profit as a percentage of revenues 6.92
% 5.96 % Adjusted EBITDA 49,275 50,010 Adjusted EBITDA as a
percentage of revenues 3.30 % 3.06 % (a) - Revenues and cost
of revenues include $81,857 and $90,552 of inter-segment activity
for the thirteen weeks ended September 2, 2017 and August 27, 2016,
respectively, that is eliminated in consolidation.
RITE AID CORPORATION AND SUBSIDIARIES SUPPLEMENTAL
SEGMENT OPERATING INFORMATION (Dollars in thousands) (unaudited)
Twenty-six weeks endedSeptember 2,
2017
Twenty-six weeks endedAugust 27, 2016
Retail Pharmacy Segment Revenues (a) $ 12,618,137 $
13,161,030 Cost of revenues (a) 9,280,334
9,536,314 Gross profit 3,337,803 3,624,716 LIFO charge
22,506 27,511 FIFO gross profit
3,360,309 3,652,227 Gross profit as a percentage of revenues
26.45 % 27.54 % LIFO charge as a percentage of revenues 0.18 % 0.21
% FIFO gross profit as a percentage of revenues 26.63 % 27.75 %
Selling, general and administrative expenses 3,341,264
3,432,536 Selling, general and administrative expenses as a
percentage of revenues 26.48 % 26.08 % Cash interest expense
209,630 199,787 Non-cash interest expense 10,910
10,702 Total interest expense 220,540 210,489
Adjusted EBITDA 307,960 507,470 Adjusted EBITDA as a percentage of
revenues 2.44 % 3.86 %
Pharmacy Services
Segment Revenues (a) $ 3,006,072 $ 3,237,235 Cost of revenues
(a) 2,797,838 3,050,908 Gross profit
208,234 186,327 Gross profit as a percentage of revenues
6.93 % 5.76 % Adjusted EBITDA 97,874 91,185 Adjusted EBITDA
as a percentage of revenues 3.26 % 2.82 %
(a) -
Revenues and cost of revenues include
$163,853 and $184,278 of inter-segment activity for the twenty-six
weeks ended September 2, 2017 and August 27, 2016, respectively,
that is eliminated in consolidation.
RITE AID CORPORATION AND SUBSIDIARIES SUPPLEMENTAL
INFORMATION RECONCILIATION OF NET INCOME TO ADJUSTED EBITDA (In
thousands) (unaudited)
Thirteen weeks endedSeptember 2, 2017
Thirteen weeks endedAugust 27, 2016
Reconciliation of net income to adjusted EBITDA: Net
income $ 170,716 $ 14,773 Adjustments: Interest expense 111,261
105,388 Income tax expense 107,087 10,928 Depreciation and
amortization 132,012 142,051 LIFO charge 5,632 13,760 Lease
termination and impairment charges 3,128 7,233 Walgreens Boots
Alliance merger termination fee (325,000 ) - Other 8,434
18,520 Adjusted EBITDA $ 213,270 $
312,653 Percent of revenues 2.78 % 3.89 % RITE
AID CORPORATION AND SUBSIDIARIES SUPPLEMENTAL INFORMATION
RECONCILIATION OF NET INCOME TO ADJUSTED EBITDA (In thousands)
(unaudited)
Twenty-six weeks endedSeptember 2,
2017
Twenty-six weeks endedAugust 27, 2016
Reconciliation of net income to adjusted EBITDA: Net
income $ 95,367 $ 10,185 Adjustments: Interest expense 221,198
210,501 Income tax expense 71,878 4,619 Depreciation and
amortization 274,104 280,839 LIFO charge 22,506 27,511 Lease
termination and impairment charges 7,214 13,014 Walgreens Boots
Alliance merger termination fee (325,000 ) - Other 38,567
51,986 Adjusted EBITDA $ 405,834 $
598,655 Percent of revenues 2.62 % 3.69 % RITE
AID CORPORATION AND SUBSIDIARIES SUPPLEMENTAL INFORMATION ADJUSTED
NET (LOSS) INCOME (Dollars in thousands, except per share amounts)
(unaudited)
Thirteen weeks endedSeptember 2, 2017
Thirteen weeks endedAugust 27, 2016
Net income $ 170,716 $ 14,773 Add back - Income tax expense
107,087 10,928 Income before income
taxes 277,803 25,701 Adjustments: Amortization of EnvisionRx
intangible assets 19,560 20,853 LIFO charge 5,632 13,760 Merger and
Acquisition-related costs 13,883 1,402 Walgreens Boots Alliance
merger termination fee (325,000 ) -
Adjusted (loss) income before income taxes (8,122 ) 61,716
Adjusted income tax expense (a) 7,480 25,335
Adjusted net (loss) income $ (15,602 ) $ 36,381
Adjusted net (loss) income per diluted share:
Numerator for adjusted net (loss) income per diluted share:
Adjusted net (loss) income $ (15,602 ) $ 36,381
Denominator: Basic weighted average shares 1,048,548
1,044,198 Outstanding options and restricted shares, net -
17,251 Diluted weighted average shares
1,048,548 1,061,449 Net income
per diluted share $ 0.16 $ 0.01 Adjusted net (loss) income
per diluted share $ (0.01 ) $ 0.03
(a)
The fiscal year 2018 and 2017 annual
effective tax rates, adjusted to exclude amortization of EnvisionRx
intangible assets, LIFO charges, Merger and Acquisition-related
costs and the Walgreens Boots Alliance merger termination fee from
book income, are used for the thirteen weeks ended September 2,
2017 and August 27, 2016, respectively.
RITE AID CORPORATION AND SUBSIDIARIES SUPPLEMENTAL
INFORMATION ADJUSTED NET (LOSS) INCOME (Dollars in thousands,
except per share amounts) (unaudited)
Twenty-six weeks endedSeptember 2,
2017
Twenty-six weeks endedAugust 27, 2016
Net income $ 95,367 $ 10,185 Add back - Income tax expense
71,878 4,619 Income before income taxes
167,245 14,804 Adjustments: Amortization of EnvisionRx
intangible assets 40,276 41,168 LIFO charge 22,506 27,511 Merger
and Acquisition-related costs 21,121 4,158 Walgreens Boots Alliance
merger termination fee (325,000 ) -
Adjusted (loss) income before income taxes (73,852 ) 87,641
Adjusted income tax (benefit) expense (a) (11,346 )
34,468 Adjusted net (loss) income $ (62,506 ) $ 53,173
Adjusted net (loss) income per diluted share:
Numerator for adjusted net (loss) income per diluted share:
Adjusted net (loss) income $ (62,506 ) $ 53,173
Denominator: Basic weighted average shares 1,047,687
1,043,317 Outstanding options and restricted shares, net -
17,210 Diluted weighted average shares
1,047,687 1,060,527 Net income
per diluted share $ 0.09 $ 0.01 Adjusted net (loss) income
per diluted share $ (0.06 ) $ 0.05
(a)
The fiscal year 2018 and 2017 annual
effective tax rates, adjusted to exclude amortization of EnvisionRx
intangible assets, LIFO charges, Merger and Acquisition-related
costs and the Walgreens Boots Alliance merger termination fee from
book income, are used for the twenty-six weeks ended September 2,
2017 and August 27, 2016, respectively.
RITE AID CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (Dollars in thousands)
(unaudited)
Thirteen weeks endedSeptember 2, 2017
Thirteen weeks endedAugust 27, 2016
(a)
OPERATING ACTIVITIES: Net income $ 170,716 $ 14,773
Adjustments to reconcile to net cash provided by (used in)
operating activities: Depreciation and amortization 132,012 142,051
Lease termination and impairment charges 3,128 7,233 LIFO charge
5,632 13,760 (Gain) loss on sale of assets, net (14,495 ) 174
Stock-based compensation expense 6,324 12,552 Changes in deferred
taxes 103,010 7,747 Excess tax benefit on stock options and
restricted stock - (2,365 ) Changes in operating assets and
liabilities: Accounts receivable (60,025 ) (152,725 ) Inventories
(93,886 ) (216,911 ) Accounts payable 58,180 34,693 Other assets
and liabilities, net (105,499 ) (1,943 ) Net cash
provided by (used in) operating activities 205,097 (140,961 )
INVESTING ACTIVITIES: Payments for property, plant and equipment
(59,723 ) (119,641 ) Intangible assets acquired (4,839 ) (12,488 )
Proceeds from dispositions of assets and investments 8,768 3,745
Proceeds from insured loss 1,490 - Net
cash used in investing activities (54,304 ) (128,384 ) FINANCING
ACTIVITIES: Net (payments to) proceeds from revolver (100,000 )
270,000 Principal payments on long-term debt (3,829 ) (5,509 )
Change in zero balance cash accounts (18,579 ) (1,728 ) Net
proceeds from the issuance of common stock 68 1,587 Excess tax
benefit on stock options and restricted stock - 2,365 Payments for
taxes related to net share settlement of equity awards
(3,924 ) (6,117 ) Net cash (used in) provided by financing
activities (126,264 ) 260,598 Increase
(decrease) in cash and cash equivalents 24,529 (8,747 ) Cash and
cash equivalents, beginning of period 214,449
144,840 Cash and cash equivalents, end of period $ 238,978
$ 136,093
SUPPLEMENTAL CASH FLOW
INFORMATION Payments for property, plant and equipment $
59,723 $ 119,641 Intangible assets acquired 4,839
12,488 Total cash capital expenditures 64,562 132,129
Equipment received for noncash consideration - 114 Equipment
financed under capital leases 4,758 1,307
Gross capital expenditures $ 69,320 $ 133,550
(a) During the thirteen weeks ended June
3, 2017, the Company adopted ASU 2016-09, Improvements to Employee
Share-Based Payment Accounting, which resulted in a retrospective
reclassification of $6.1 million for payments for taxes related to
net share settlement of equity awards from operating activities to
financing activities which decreased net cash used in operating
activities and decreased cash provided by financing activities for
the thirteen weeks ended August 27, 2016.
RITE AID CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (Dollars in thousands)
(unaudited)
Twenty-six weeks endedSeptember 2,
2017
Twenty-six weeks endedAugust 27, 2016
(a)
OPERATING ACTIVITIES: Net income $ 95,367 $ 10,185
Adjustments to reconcile to net cash provided by operating
activities: Depreciation and amortization 274,104 280,839 Lease
termination and impairment charges 7,214 13,014 LIFO charge 22,506
27,511 (Gain) loss on sale of assets, net (20,216 ) 1,230
Stock-based compensation expense 15,362 23,696 Changes in deferred
taxes 64,850 1,998 Excess tax benefit on stock options and
restricted stock - (3,248 ) Changes in operating assets and
liabilities: Accounts receivable (73,782 ) (227,255 ) Inventories
(62,714 ) (157,471 ) Accounts payable 62,552 150,339 Other assets
and liabilities, net (87,412 ) (101,799 ) Net cash
provided by operating activities 297,831 19,039 INVESTING
ACTIVITIES: Payments for property, plant and equipment (120,461 )
(225,718 ) Intangible assets acquired (13,073 ) (28,869 ) Proceeds
from dispositions of assets and investments 17,407 6,833 Proceeds
from insured loss 3,627 - Net cash used
in investing activities (112,500 ) (247,754 ) FINANCING ACTIVITIES:
Net (payments to) proceeds from revolver (190,000 ) 250,000
Principal payments on long-term debt (8,096 ) (11,230 ) Change in
zero balance cash accounts 10,189 534 Net proceeds from the
issuance of common stock 215 3,958 Excess tax benefit on stock
options and restricted stock - 3,248 Payments for taxes related to
net share settlement of equity awards (4,071 ) (6,173
) Net cash (used in) provided by financing activities
(191,763 ) 240,337 (Decrease) increase in cash and
cash equivalents (6,432 ) 11,622 Cash and cash equivalents,
beginning of period 245,410 124,471
Cash and cash equivalents, end of period $ 238,978 $ 136,093
SUPPLEMENTAL CASH FLOW INFORMATION
Payments for property, plant and equipment $ 120,461 $
225,718 Intangible assets acquired 13,073
28,869 Total cash capital expenditures 133,534 254,587
Equipment received for noncash consideration 1,295 746 Equipment
financed under capital leases 8,615 2,860
Gross capital expenditures $ 143,444 $ 258,193
(a) During the thirteen weeks ended June
3, 2017, the Company adopted ASU 2016-09, Improvements to Employee
Share-Based Payment Accounting, which resulted in a retrospective
reclassification of $6.2 million for payments for taxes related to
net share settlement of equity awards from operating activities to
financing activities which increased net cash provided by operating
activities and decreased cash provided by financing activities for
the twenty-six weeks ended August 27, 2016.
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Rite Aid CorporationINVESTORS:Matt Schroeder,
717-214-8867investor@riteaid.comorMEDIA:Susan Henderson,
717-730-7766
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